You get what you pay for – patent application lapses for non-payment of continuation fee

Peter Heerey AM, QC, Tom Cordiner & Alan Nash
Correspondents for South Australia, Victoria and Western Australia

Note: Where any of the barristers were involved in a case reported below and the matter is still running, or potentially so, the other correspondents have taken the role of reporting that case.

Miles v Commissioner of Patents [2014] FCAFC 109 26 August 2014 

Lapsing patent application

Bennett, Greenwood and Middleton JJ unanimously upheld the primary judge’s decision in Miles v Commissioner of Patents [2013] FCA 1017.

On 12 December 2011, Miles requested examination of his patent application.  The patent application was examined and grounds of objection were raised.  Miles was invited to respond but failed to do so.

In early September 2012, the Commissioner sent a letter to Miles stating that as no response had been received, the matter would be set down for hearing allowing one month for submissions, after which the matter would proceed to a hearing, whether or not submissions were received.  Miles again did not respond, even though warned that the Commissioner could refuse the patent application.

The Patents Act provides that, if the continuation fee for a patent application is not paid within the prescribed period, the patent application lapses.  The fee for continuation of the patent application fell due on 22 October 2012 and Miles failed to pay it.  However, the regulations also provided that if the continuation fee is paid within 6 months of the relevant anniversary along with the prescribed additional fee, the period is taken to be extended until the fee is paid.

On 1 November 2012, the Commissioner refused the patent application on the basis that the objections were appropriately raised and the appellant had chosen not to defend the Patent Application.

After that refusal, that is, after the anniversary date for the required continuation fee but within the six month grace period provided for in the Act for the payment of that fee, on 28 March 2013 the appellant applied for amendment and tendered the outstanding continuation fee.

Miles’ appeal raised the following three grounds:

(a) the Commissioner could not refuse the patent application because it had already lapsed (‘Ground One’);

(b) in any event, the Commissioner’s refusal was unlawful (‘Ground Two’);

and (c) the Court’s discretion miscarried in otherwise denying relief to the appellant (‘Ground Three’).

The Full Court held that Ground One was misconceived because the continuation fee had been paid within the prescribed period – the patent application was still on foot when the Commissioner refused it on 1 November 2012 because on that date, the prescribed period within which Miles was to pay a continuation fee had not expired.  The Full Court observed that if the continuation fee had not been paid within the 6 month grace period, then the application would have lapsed on the anniversary date not the expiry of the grace period.

With respect, there is a tension between the conclusion on the one hand that, if no fee was paid during the grace period, the patent application would have lapsed before the Commissioner had refused Miles’ patent application; and on the other hand the conclusion that, because the fee had been paid after refusal, the patent application did not lapse before refusal.  The answer appears to be that if the fee is paid during the grace period, that deems there to have been no lapsing.

The thrust of Ground Two was that the Commissioner could not refuse the patent application if Miles did not engage with the Commissioner and, instead, had to simply wait for the patent application to lapse.  The Full Court disagreed.  Miles also asserted that the Commissioner was obliged to direct an amendment of the patent application in order to overcome her objections.  The Full Court also rejected that contention.

In Ground Three, Miles contended that the primary judge erred in holding that, even if the Commissioner’s refusal of the patent application was vitiated by jurisdictional error, then the relief Miles sought should be refused on discretionary grounds.  The Full Court did not need to decide this ground since they found no error in the Commissioner’s decision.